Brazil to seek lower auto quota with Mexico to shield industry -sources
By Alonso Soto
BRASILIA Feb 19 (Reuters) - Brazil will seek to reduce the dollar amount of vehicles that Mexico sells duty-free to the South American nation, two sources familiar with the matter said on Thursday, raising tensions in upcoming trade negotiations between Latin America's largest economies.
Mexican and Brazilian officials will start talks on Friday over an automotive treaty due to expire on March 19. Mexico is pushing to upon up trade as its auto industry booms, while Brazil wants to renew a quota on light vehicles that protects its struggling factories.
The agreement, signed in 2012, calls for the free trade of vehicles after quotas expire.
"Brazil wants to lower the quotas as a way to reduce the deficit with Mexico," said the source, who asked for anonymity to speak freely.
The source said Brazil wants to extend the quotas while it negotiates a broader free trade agreement including heavy machinery and food.
Another source said Brazil may seek a "marginal" reduction in the quota.
The treaty allows Mexico and Brazil to sell each other up to $1.64 billion worth of vehicles a year. Exports above that amount are subject to tariffs of up to 35 percent.
The long-running dispute threatens to hurt the countries' ties and shows the growing differences between efforts by Mexico to open up its market and actions by Brazil to protect its industry. Continuación...